What would happen if a bank went bust?

[NSR Mick]

In light of the current ecenomical climate and the UK's biggest mortgage lender needing to be rescued by merging with another bank I was thinking what would happen if HBOS where left to go under?

I have my Mortgage, loan,current account, savings account, credit card and business account with them.

I'm assuming that the recievers would be straight round wanting the balance of my mortgage. Is this the case or could I tell them to do one.
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[Kickstart]

Hi

While they probably could demand the balance (same with most loans), in practice the mortgage to you is an asset that is worth more than the balance outstanding. Hence the receivers would make more on selling the mortgage on to another company.

All the best

Keith
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[stinkwheel]

Nobody is saying it, but I don't think it's impossable that there could be a run on the Bank of Scotland.

If I was with them and they got taken over by Lloyds TSB, I'd take my money out.

Also a lot of Scottish people bank with them because it is the Bank of Scotland, if this is no longer the case, they may well decide to take their custom elsewhere.

I think the media are keeping quiet about the possability in case they are accused of triggering it.
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[Skudd]

Not surprised they are keeping quiet when most shares go up and down on rumours and stories. If you were to rumour Tesco was in a financial mess and would be losing contracts I'm sure its shares would go down, if they went down enough then they would be prime for a take over and asset stripping, all for a rumour.
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Petty Anarchists look at "1984".............. The Visionary looks at "Animal Farm".

[Paivi]

[Itchy]

[Itchy]

[Kickstart]

[Itchy]

yes but they would break your leg AND send you the bill for it too as an admin charge ONTOP of your mortgage liabilities,

next time they come break your leg twice and send you a bill twice....
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Spain 2008France 2007Big one 2009 We all die. The goal isn't to live forever, the goal is to create something that will. In the end, your life will flash before your eyes. Make sure it is worth watching.

[Kickstart]

Hi

Nope, because if they phycally came breaking legs then they would be in no position to send any letters or collect anything.

If they ramped the cost of lending up then you just go elsewhere. Which means that they have paid out a premium for the debt and just thrown the money away.

All the best

Keith
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Traxpics, track day and racing photographs - Bimota Forum - Bike performance / thrust graphs for choosing gearing

[GhostRider]

[Kickstart]

[GhostRider]

Indeed, I also jest

GhostRider
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I have all the characteristics of a human being: blood, flesh, skin, hair; but not a single, clear, identifiable emotion, except for greed and disgust. Something horrible is happening inside of me and I don't know why. My nightly bloodlust has overflown into my days. I feel lethal, on the verge of frenzy. I think my mask of sanity is about to slip.

[scorps]

im confused, last year HBOS announced its biggest profits ever, also this XL thing , I dont know anyone who had actually heard of them before the news broke.
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[Itchy]

[Itchy]

banks have already gone bust thats the thing , all it means is that the government ie you and me well maybe you , will be bailing them out via your taxes..

The current bail outs and special liquidity schemes have in effect added 8p onto your income tax, either paid for by borrowing or inflation , it means the basic rate has to be 28% income tax just to pay the interest on such loans..

I used to joke about 125% basic rate income tax, and 2000% income tax if you earned over 10K , but I'm not so sure...

oops sorry miscalculation NR £58Bn and B&B £52Bn, which is about 50% ontop of income tax if paid off within a year completely forgetting compounded interest which 5-10% means an extra 4p on income tax just to pay the interest
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Spain 2008France 2007Big one 2009 We all die. The goal isn't to live forever, the goal is to create something that will. In the end, your life will flash before your eyes. Make sure it is worth watching.